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POLITICO 44

With Wall Street preparing to dole out big bonuses in the coming weeks, some Democrats are already gearing up the populist rhetoric, proposing a 50 percent tax on banker windfalls.

Rep. Peter Welch (D-Vt.) Thursday morning introduced the tax on bonuses above $50,000 from any bank part of the Toxic Asset Relief Program. The money, Welch said, would go to Small Business Administration lending programs.

Separately, Rep. Dennis Kucinich (D-Ohio) this week is pushing his own legislation that would impose a 75 percent tax on bonuses to bankers, whether their institution has received TARP funds or not.

Neither of the proposals has a real shot on the House floor, but the proposals — coming from some of the most liberal members of the House — show the ongoing anger at Wall Street. Welch’s legislation has more than 20 co-sponsors.

The bonus tax proposals come as President Barack Obama is expected Thursday to announce a new fee on financial institutions based on their exposure to risk. Obama has consistently bypassed a wide-ranging tax on bonuses.

Lawmakers, in an election year, are likely to see constituents outraged as big-dollar bonuses are splashed across newspapers after Congress propped the institutions up with billions in assistance. Rep. John Garamendi (D-Calif.) said some of his constituents are already “madder than hell."

“Every American knows about the speed limit, and what we’re talking about with this bill is a greed limit and there’s been plenty of greed,” said Rep. Lloyd Doggett (D-Texas).

That seemed to be the feeling Thursday morning, as a group of Democrats, many of them clad in jeans, sweaters and shirts without ties, took a break from their annual issues retreat to discuss the legislation. Rep. Steve Cohen (D-Tenn.) called the bankers “pigs at the trough.” And Rep. Jim McDermott (D-Wash.) called the measure “economic justice.”

“(I)t is time for [Wall Street] to get the message that the money that we put into the banking industry was not to line their pockets,” McDermott said.

Crazy stuff, makes no sense. The government bailed out the banks not to help the bankers but to save the financial system. The reason the system was on the brink of disaster has as much to do with the governement as it does with the policy of the banks.

Additionally, the larger banks were forced to take the money, wether they wanted to or not, and now they want to penalize the exployees.

Having repaid the loans from the Government, Democrats now want to penalize the big banks because they don't like the bonuses they are paying their employees! "Shame on the big banks for making a profit!", "economic justice", constituents are already “madder than hell. "

The economy sucks, unemployment is still going up, foreclosures are still increasing and all the Democrats can think of is more taxes that the public will have to pay and destroying more jobs! And they wonder why the American Public is rebelling!

This a Dum idea. It does not Adress the Problem! You need to Seperate the INVESTMENT BANKS & COMERCIAL BANK. Reinstate the GLASS-STEGAL ACT! That will take care of it. Clinton repealed in the 90's. What is wrong with these people in Congress.

This a Dum idea. It does not Adress the Problem! You need to Seperate the INVESTMENT BANKS & COMERCIAL BANK. Reinstate the GLASS-STEGAL ACT! That will take care of it. Clinton repealed in the 90's. What is wrong with these people in Congress.

Rep. Peter Welch (D-Vt.) Thursday morning introduced the tax on bonuses above $50,000 from any bank part of the Toxic Asset Relief Program. The money, Welch said, would go to Small Business Administration lending programs.

Separately, Rep. Dennis Kucinich (D-Ohio) this week is pushing his own legislation that would impose a 75 percent tax on bonuses to bankers, whether their institution has received TARP funds or not.

The Democrats need to re-read the Constitution. Punitive taxation specifically targeting a specific group of people is a flagrant violation of the Constitution.

Article I Section 9 of the Constitution reads as follows:

No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

Section 9 also precludes Bills of Attainder and bars preferential treatment to the commerce of one state over another.

A punitive tax on a specific class of persons (not on an activity in which people may or may not engage as they so choose) is a captiation tax that acts as a Bill of Attainder--a punishment levied on a person or persons not by the courts but by the legislature, which is expressly forbidden by the text of the Constitution. While the 16th Amendment does permit income taxation without regard to apportionment among the states, the 16th Amendment does not permit taxation as punishment of arbitrary groupings of citizens.

Bankers may be scum of the earth, but they are still citizens and denizens of the United States, the Constitution still governs their treatment as it would any other group of individuals. Large banker bonuses may be bad business, may be horrid public relations, but are most assuredly not criminal and thus should not invoke a punitive response of any kind from the government--and most especially from the Congress.

Congress' duty is to the Constitution. The Democrats need to remember that and need to honor their sworn oath to uphold the Constitution at every turn. Of a certainty the proposals by Reps Welch and Kucinich do not meet that standard of excellence.

While reading articles in the Charlotte Observer about executive compensation for health care executives and the banker bonus broo-ha-ha, the following occurred to me. Executive and investment banker pay, along with sports, entertainment and a number of other careers, has spiraled out of control in the last 30 years. The US is now out of line compared with most other successful developed countries. What needs to happen is an evolutionary change in perception, not short-term reactions like a surtax on just the big banks.

What if all compensation (including benefits, perks and bonuses) over one million dollars per year was simply not tax deductible to the company – without exception. Nothing would prevent a company from paying a higher level of compensation, but it would not be subsidized by the taxpayer. Many companies would continue to pay higher, but it would create a steady downward influence that would no doubt have a significant impact over several years. Simultaneously, it would contribute to deficit reduction for the Federal government.

Does anyone seriously think that executives at a major hospital system would suddenly start doing a poor job if they made ONLY a million dollars a year. Would a Wall Street trader stop trading if they could only make a million playing with someone else's money?

What makes talented, hard-working people unhappy is not so much the total amount, it is the total amount relative to others in their field. This is really about expectation and perception, not the real worth of the jobs they do. Compensation has become an inflated scorecard. Would football or basketball games actually be better or more competitive if typical scores were 1,000 points per game? Allowing the entire scale to continually tick upward is destructive for the economy, society and the country.

Does anyone seriously think that executives at a major hospital system would suddenly start doing a poor job if they made ONLY a million dollars a year. Would a Wall Street trader stop trading if they could only make a million playing with someone else's money?

Does anyone seriously think that conspiring to pay people less will prove any incentive to excellence?

The sobering reality of pay--executive and otherwise--what motivates people is not the dollars they get, but the chance to get more dollars. If there is no chance to earn "more" (regardless of what one's income level might be), the incentive to perform at one's best is significantly diminished. Were it not so, by your logic everyone would get paid a minimum wage and be content.

It is a punitive tax targeting a group which, while guilty of poor judgment and bad decisions, is, as a group, not guilty of any crime--of a certainty they have not been charged with any crime.

Consequently, this punitive tax is in fact aa Bill of Attainder, which expressly forbidden by Article I Section 9 of the Constitution.

I would prefer the Democrats worry less about banker's pay and worry more about their sworn oath to uphold the Constitution--because thus far in the 111th Congress, the Democrats have so blatantly violated that oath as to make their conduct treasonous.